What is a CIBIL Score?
A credit score is a numerical indication of a person's creditworthiness. It aids in determining your ability to repay the amount borrowed. A person's credit score typically varies from 300 to 900, and the applicant with the highest score is regarded as the most trustworthy. Always attempt to achieve the top of the range because it comes in handy when asking for a loan or a credit card. If you have a low score or fall into a lower range, it shows that you are an irresponsible loan applicant who has not made regular payments on your loans/dues.
What exactly is a good credit score?
A credit score is a three-digit numerical indicator of creditworthiness. It may be calculated with a credit score checker and runs from 300 to 900. A credit score of 680 or more is considered excellent. Before making a loan, lenders consider the credit score. When a person applies for a loan, lenders investigate – Employment status account details payment history, semi-income ratio CIBIL report and score. If the debtor or borrower is unable to repay the loan due to a disability or long-term illness, credit health insurance protects the debtor.
Why is it critical to keep a good credit score?
Here are some of the most essential reasons why you should keep a decent credit score:
- Enhances loan eligibility: Having a strong credit score makes it easier to secure a loan. A strong credit score indicates that you pay your bills or outstanding amounts on time, which makes a favourable impression on the banks or other financial organisations where you have sought for a loan.
- Pre-approved loans are available to candidates with an excellent credit score and a long credit history. Furthermore, the loan that you applied for is authorised fast, with no processing time.
How is Credit Score calculated?
Credit information departments calculate credit scores based on the following factors:
- Credit score history: The credit score history shows whether the loan applicant is capable of repaying debts. It contains information about the number of accounts you have, credit usage, and late or failed payments.
- Credit score inquiries: credit inquiries include information such as the type of loan you have inquired about, the amount of loan you have applied for, and whether you are an individual applicant or a joint applicant.
- Repayment record: A repayment record contains information about your repayment timeliness and failed payments.
Here are some of the most essential reasons why you should keep your credit score high:
- It enhances your loan eligibility: Having a good credit score makes it easier to secure a loan. A strong credit score indicates that you pay your bills or outstanding amounts on time, which makes a positive impression on the banks or other financial organisations where you have sought for a loan.
- Loan approvals are granted more quickly for candidates with a solid credit score and a long credit history. Furthermore, the loan you applied for is authorised fast, with no processing time.
- Lower interest rate: If you have a strong credit score, you can get a lower interest rate on the loan amount you have applied for. credit cards with appealing advantages- If you have a good credit score, you will be given credit cards with appealing features and rewards.
- Greater credit card limits: Having a strong credit score not only qualifies you for the best credit cards with attractive bonuses or a cheaper rate of interest on the loan you have applied for, but it also qualifies you for a larger loan amount. A good credit score indicates that you are capable of handling credit in the best way possible; thus, banks or financial organisations will consider providing you a credit card with a good credit score.
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